How Web3 Can Address Web2's Identity and Data Challenges

When Web2 was first introduced, it was seen as a radical change in how users would utilize the Internet. It paved the way for more user interaction online as people were encouraged to generate content on the Internet themselves. This push from Web2 for more user-generated content led to the development of several commonly used websites and applications such as Facebook, Instagram, X, YouTube, and TikTok. 

Ultimately, the innovations that came with Web2 helped the Internet become more engaging and interconnected. However, despite the benefits that Web2 has provided, calls to improve the system have gotten louder over the years, particularly with how Web2 entities have addressed digital identities. Over the years, massive Web2 organizations have been criticized for mishandling people’s personal data and information, leading to many privacy and security-related problems. In response, Web3 digital identities were developed to one day create a more decentralized Internet where users were empowered to have full control over their data and personal information.

How Digital Identities Changed from Web2 to Web3

A digital identity is a list of information that defines an individual within the virtual realm. Examples of unique identifiers that make up a digital identity include but are not limited to:

• Date of birth
• Email address
• Home address
• Driver’s license number
• Social security number
• Usernames/passwords
• Purchase and browsing history

The personal data that make up a digital identity is not only used to verify that a person is who they claim to be, but it also serves as a necessity for online users if they want access to the wide range of services and resources available within the virtual world. Whether it’s shopping online, sending emails, accessing an online bank account, subscribing to a streaming service, playing an online multiplayer game, or even posting something on social media, many of these virtual activities and services require a digital identity from the user. 

However, while digital identities remain hugely important, their concepts and practices have changed over time from Web2 to Web3. What ultimately separates Web2 digital identities from Web3 digital identities is how they manage personal information as the former provides a centralized approach while the latter champions a more decentralized one.

Web2-Centralized Approach

The current system that manages digital identities is called centralized identity management (CIM). A CIM is when a government or corporation like Meta or Google consolidates all the personal data and information it owns and stores them in one centralized location such as a physical server or a cloud storage. By relying on this centralized approach, platforms like Facebook, X/Twitter, and Google can provide services like Single Sign-On (SSO) which allows online users to access third-party applications and websites using their Google or Facebook account.  

Web3-Decentralized Approach

Compared to the centralized approach of Web2, Web3 offers online users a decentralized way of managing their digital identities. This means that instead of personal data and information being controlled by a centralized entity, they would be owned and managed by a single individual. Therefore, rather than relying on servers owned by centralized providers like Apple, users can keep their personal information on their own devices instead. Ultimately, the concept of Web3 digital identities is built on Self-Sovereign Identity, an idea that rejects the current Web2 system and instead creates a model in which individuals, not large institutions, are masters of their data. 

Challenges of Traditional Identity Systems 

While Web2’s CIM has created a centralized and convenient approach to managing digital identities, it is not a perfect system as it is filled with various limitations that often leave people’s data at risk. For example, because of how centralized providers and Web2 companies have monopolized and handled digital identities, it has led to several common issues such as:

• Privacy Issues and Lack of Control: Under the current identity system, centralized entities like Meta and Google have the ultimate authority over people’s data. The users themselves have very little, if any, control over how their personal information is stored, managed, and even shared/monetized, which can lead to issues like privacy abuse.
• Hacking and Data Breaches: Centralized servers are vulnerable to hacking and data breaches, and because vast amounts of people’s personal data are stored in these places, they often become susceptible to crimes like fraud and identity theft.
• Single Point of Failure: CIMs are designed in a way in which if the central authority is disrupted or compromised, it can lead to services or platforms going down until the issue has been fixed. This creates issues like service interruption and downtime. 

How Web3 Technologies Will Address The Challenges of Web2

In response to these common yet harmful issues, Web3 technologies have been developed to address the challenges of Web2. On top of creating a more decentralized form of the Internet, Web3 will be able to resolve the privacy, security, and control issues that have become commonplace because of how Web2 organizations have mishandled user data. The Web3 technologies that have been developed to resolve these issues include:

Decentralized Identifiers (DIDs)

Decentralized Identifiers are essentially virtual driver’s licenses or passports in that they provide users with a means of verifying who they are. What makes DIDs special is that not only are they not managed by a centralized entity or corporation, but they can also authenticate a person’s identity without forcing them to give up their personal information. This means that people have total control over their data and are not required to submit any of it to anyone if they so choose. DIDs also provide benefits such as:

• Cannot be taken away by any party nor can they be tampered with.
• Increased security. The Data in DIDs are protected by digital signatures, which can reduce the chances of data breaches and hacking. 

Verifiable Credentials

Verifiable Credentials are essentially digital versions of credentials and documents that are cryptographically protected and can be used as an additional means of verifying a person’s identity. Driver’s licenses, passports, and employee certifications are some documents that can become Verifiable Credentials.  

Blockchain

A blockchain is the main backbone of the Web3 ecosystem as it serves as a decentralized and distributed ledger that keeps track of all transactions made between different parties/users. Not only are these records being made securely and transparently, but they are also immutable, meaning that they cannot be deleted or altered once added to the blockchain. Additionally, because Web3 blockchains are decentralized, they cannot be controlled or managed by one single authority. Blockchains ensure that people have control over their own digital identities and will not be manipulated by massive, centralized corporations like Meta or Google.  

A New Future of the Internet with Web3

While Web2 fundamentally changed for the better how people would perceive and use the Internet, it also came with a series of disadvantages and limitations that put digital identities at risk. While the centralized approach to managing data has some benefits, it is littered with privacy and security issues and gives users little control over their own personal data.

Therefore, some people have argued that the Internet should transition to Web3 as it will not only usher in a more decentralized Web but will also address many of Web2’s issues. Considering the potential of Web3 technology like DIDs, verifiable credentials, and blockchains, some online users believe that Web3 is the future for both the Internet and digital identities.

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